McLean-based Exelis Inc. sued the Navy in an effort to prevent the service from releasing its pricing information to competitors, claiming the act would provide other companies an advantage for current and future contracts.

A Freedom of Information Act request from L-3 Communications spurred the Navy decision to release pricing under a contract currently held by Exelis, which is scheduled to expire in December. The Navy issued a new request for proposals in June for the replacement contract to provide specialized technical support for range instrumentation systems for the Missile Defense Agency. Responses were due July 22.

The Navy, which has yet to make an award for the contract, agreed to not release the pricing information, pending the outcome of the lawsuit, which was filed in a U.S. District Court in D.C. Aug. 14.

Exelis argued that the release of the pricing information would provide competitors an opportunity to adjust their proposals before final revisions are due. That, the company said, would marginally undercut Exelis' quote, and also provide an advantage with respect to all other opportunities involving similar services. Competitors could, according to this argument, use the government requirements together with the pricing information to derive the cost structure and pricing approach used by Exelis, and ultimately "reverse engineer" the company's costs to obtain its confidential indirect cost-rate information.

Exelis pointed to seven existing and at least seven planned task and delivery orders under the Navy's Seaport-e acquisition program that could be compromised.

"As a general matter, the current year price that an agency pays for a good or service is always public information," said Alan Chvotkin, executive vice president and counsel at the Professional Services Council. "By contrast, 'how' the contractor arrived at its price is generally treated by the company and the government as proprietary information and not disclosed to the public."

The company pleaded its case to the Navy, which ultimately determined Exelis failed to demonstrate "actual competition and a likelihood of substantial competitive harm," according to the complaint.

Exelis alleges the Navy incorrectly applied FOIA regulations, and violated acquisition regulations that prohibit agencies from releasing information before or after contract award if it could violate privacy and trade secret laws.

So what are the odds of a win?

Hard to predict, Chvotkin said.

"The law is fraught with too many case-specific factors and inconsistent applications of legal standards," said Chvotkin.

Jill R. Aitoro covers federal contracting.

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